Where Can Women Entrepreneurs Find the Most Success?

Small to medium-sized cities may have fewer barriers to entry than some of the nation’s leading start-up hubs.

With women like Elizabeth Holmes founding multi-billion dollar companies, and others such as Sheryl Sandburg and Beth Comstock running them, there’s a growing sense that the U.S. is finally starting to carve out space for tenacious women in the upper-most echelons of the business world.

Of course, the presence of these women is not nearly as ubiquitous as one might hope in 2015. The New York Timesreports that there are more CEOs named “John” running S&P 1500 companies than there are women. And while the number of female-owned businesses may be climbing, the actual share of women in top business positions in the U.S. is still relatively small.

Part of this is no doubt due to the fact that women face unique barriers to entry when it comes to running a business, let alone starting one. "Women-owned business are far less likely to have any start-up capital, and when they do they have much less than men-owned business," as Jessica Milli, a senior research associate at the Institute of Women’s Policy Research, recently told The Atlantic.

According to data from a 2015 Pew Research Center survey, 43 percent of Americans believe that women in executive business positions are held to higher standards than men, and the same percentage believes that the U.S. is not prepared to hire women for these top-tier positions. A relatively smaller, but still significant, number of Americans (23 percent) believe that women don’t have the time to hold an executive position, given their “family responsibilities”:

These are troubling—yet altogether unsurprising—statistics. So long as they persist, America’s professional climate will continue to favor men, both in wages and in overall sentiment.

That said, there’s evidence that some U.S. cities are more open to the idea of female entrepreneurship than others. Paul Southerland over at GoodCall, a data analysis firm, recently developed a ranking of these cities using information from the U.S. Census Bureau’s American Community Survey. In his report, Southerland scored over 400 cities according to five categories: educational attainment, number of female-owned businesses, unemployment rate, change in GDP year over year, and number of small businesses per capita. He then ranked the U.S. cities that appear to be most welcoming of aspiring female entrepreneurs.

While such rankings are by no means definitive, they do reveal an intriguing pattern: Small to mid-size cities like Annapolis and Baton Rouge appear to be more supportive of female entrepreneurship. By contrast, cities like New York and Los Angeles scored relatively poorly across all five categories, and thus are noticeably absent from the list.

And if you eliminate cities with populations under 50,000, some clear winners emerge. Cities like Houston, Orlando, Palo Alto, Austin, and Miami all have exceptionally high rates of female educational attainment (i.e. women with a bachelor’s degree or higher). And when you add in the percentage of female-owned businesses, cities like Santa Cruz and Durham perform particularly well.

In general, GoodCall’s rankings suggest that smaller cities in Illinois and mid-size cities in California offer some of the best conditions for female entrepreneurship, as you can see on their map below.

According to Southerland, women looking to start small businesses or “mom and pop” shops are more likely to succeed in the Southeast, while female-run mid-size businesses looking to appeal to a larger population have a greater chance of success in the West. But it’s important to keep in mind that many factors can contribute to entrepreneurial success, and big cities like New York, L.A., and Boston are still home to some of America’s most successful startup communities.

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Still, female entrepreneurs seem to be underrepresented and under-served in these big city environments. Southerland has some thoughts as to why. “In big, populous areas, you’re really going to have to stand out,” he theorizes, but “with lower density [areas], you’re going to have less competition, which gives you a better opportunity to succeed.”

While the competition is certainly less in smaller cities, the nature of this competition seems to matter as well. A recent article from my Atlantic colleague Gillian B. White notes that peer relationships among women could actually boost levels of female entrepreneurship:

Researchers who studied the effect of peer relationships on female entrepreneurs in India found that women who received business training with a friend were more likely to take out business loans, and more likely to report higher business activity and household income than peers who received training without a peer.

Perhaps it is the case that aspiring female entrepreneurs are having greater success in small to mid-size cities because a fair share of educated, successful women have already paved the way in these areas.

And yet, if the GoodCall data is any indication, this success is only possible where there are sufficient resources and opportunities available. For the age of female entrepreneurship to fully arrive, the U.S. needs to shift the way that all cities—not just the well-educated and open-minded ones—approach women in business.